On October 20, 2011, a panel comprised of medical experts, provider groups and families spoke at a Capitol Hill briefing, discussing issues for Medicare beneficiaries and providers when hospitals categorize patient stays as observation days rather than in-patient days. The panel, which included Care Providers of Minnesota Board Chair Gail Sheridan, advocated for counting observation stay time in a hospital toward the three-day inpatient eligibility requirement for coverage of skilled nursing facility (SNF) services under Medicare. The Capitol Hill briefing focused on the impact the current Medicare Part A policy on hospital observation status has on those patients needing additional care at a skilled nursing facility after their hospital stay. Minnesota was asked to participate due to our active involvement in the observation day issue, and the stories we have collected from families.

In addition to individuals telling their stories about how the observation stay policy impacted their families, the panel heard from medical experts and provider groups that recognize the inequity the policy poses and how it jeopardizes seniors’ access to skilled nursing care. Participants included:

• Toby Edelman, Ed. M., JD, senior policy attorney, Center for Medicare Advocacy
• Lee Barrows of Connecticut, widow of a beneficiary put under observation status
• Sandi Lubrant of Minnesota, daughter of a beneficiary put under observation status
• Eric Tangelos, MD, professor of medicine at the Mayo Clinic
• Gail Sheridan, representative for the American Health Care Association

“I have seen patients enter a skilled nursing facility after an observation stay and they are not aware that their care in the facility cannot be covered by Medicare Part A because of the lack of an inpatient stay of three days,” said Gail Sheridan, board chair of Care Providers of Minnesota and vice president of healthcare services for Tealwood Care Centers, Inc. “Patients are confused and don’t understand why there is a possibility of not receiving appropriate and necessary skilled nursing care. Patients and their families deserve clarity and peace of mind that they can get the quality skilled nursing care they need.”

Currently, patients must be admitted into a hospital as an inpatient for three days in order to be eligible for skilled nursing facility care through Medicare after they are discharged. However, classifying a hospital patient as on observation stay status is a common, clinically appropriate service to treat and assess whether a patient requires further treatment or whether they are able to be discharged. Yet, Medicare Part A will not cover skilled nursing care for a patient who was put on observation status.

In many cases patients are not told whether they are classified under observation status or as an inpatient; their admissions status is buried underneath paperwork. Patients who then enter a skilled nursing facility after an observation stay are not always aware that their care in the facility cannot be covered by Medicare Part A. This can result in the patient foregoing appropriate and necessary skilled nursing care or being forced to pay the costs out-of-pocket. The panel discussed the interaction between observation status and the new re-hospitalization penalty: hospitals now have a financial incentive to use observation status to avoid penalties for re-hospitalization, because observation stays don’t count as hospital inpatient stays.

The panel represented a larger coalition of consumer groups, long-term care providers, health care professionals and others that are working to correct this imbalance in care provided to America’s seniors. Those that spoke at the briefing support legislation introduced earlier this year, the Improving Access to Medicare Coverage Act of 2011 (S. 818), that would allow time spent under observation status in a hospital to count toward satisfying the three-day inpatient hospital requirement for coverage of skilled nursing facility services under Medicare. The coalition also hopes to gain support for a fix to the policy through the Administration, specifically through the Centers for Medicare and Medicaid Services (CMS).

The coalition that organized the October 20 briefing and supports this legislation is comprised of:

• AARP
• Alzheimer’s Association
• American Health Care Association
• AMDA – Dedicated to Long Term Care Medicine (formerly the American Medical Directors Association)
• Center for Medicare Advocacy
• Leading Age (formerly the American Association of Homes and Services for the Aging)
• National Committee to Preserve Social Security and Medicare

Patti Cullen, CAE
952.851.2487
pcullen@careproviders.org

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